DVN

Devon Energy Corp

Energy


Presented:07/20/2016
Price:$37.96
Cap:$17.99B
Current Price:$41.20
Cap:$25.80B

Presented

Date07/20/2016
Price$37.96
Market Cap$17.99B
Ent Value$27.96B
P/E RatioN/A
Book Value$12.23
Div Yield0%
Shares O/S474.00M
Ave Daily Vol9,054,102
Short Int2.85%

Current

Price$41.20
Market Cap$25.80B
Devon Energy Corp. is an independent energy company, which is engaged primarily in exploration, development and production of oil, natural gas and natural gas liquids. Its operations are concentrated mainly in Canada and the United States. It also owns natural gas pipelines, plants and treatment facilities. Devon Energy was founded by J. Larry Nichols and John W. Nichols in 1971 and is headquartered in Oklahoma City, OK.

Publicly traded companies mentioned herein: Anadarko Petroleum Corporation (APC), Concho Resources Inc (CXO), Devon Energy Corp (DVN), Encana Corporation (ECA), EnLink Midstream LLC (ENLC), Suncor Energy Inc (SU)

Highlights

The presenter believes Devon Energy (DVN) is somewhat misunderstood and undervalued at this time, and he is long the stock at ~$38. The company may simply be too big for the value of its Delaware Basin and STACK acreage to be appreciated. Based on headline numbers DVN is a ~$40 billion EV company, but when he makes the necessary adjustments to back out the midstream business he sees a $20 billion E&P with ~$5 billion of that value attributable to the Canadian Heavy Oil segment. Despite DVN’s US E&P operations seeing the best well results of any US producer in 2015, this “segment” trades at a discount ($15 billion) to Concho Resources ($18 billion EV) and others. He is willing to hold his long position for the next 6-12 months due to his belief that shareholders will benefit from cost cutting and continued portfolio changes such as selling Heavy Oil or its Barnett wells (Devon has sold >$2 billion of non-core assets recently).

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Idea Discussion

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